Question

Suppose market share for an industry is divided among eight companies in the following manner:

Firm Market Share (Percent)
A 26
B 20
C 15
D 11
E 9
F 8
G 6
H 5
a. The Herfindahl index for this industry is. __________
b. The four-firm concentration ratio for this industry is ________ (Note: Enter the ratio as a percentage.)

Answer 1

16.28

72%

Step-by-step explanation:

Herfindahl index = the Herfindahl index is found by squaring the each firms market share and adding them together.

= 676 + 400 +225 +121 +81 + 64 + 36 + 25 = 1628% = 16.28

The four firm concentration is found by adding the marker share of the top 4 firms in the industry = 26% + 20% + 15% + 11% = 72%

I hope my answer helps you